Tocantins Integrated Sustainable Regional Development Region. Latin America And Caribbean Country

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB5696 (The report # is automatically generated by IDU and should not be changed) Project Name Tocantins Integrated Sustainable Regional Development Region Latin America And Caribbean Country Brazil Sector Roads and highways (70%);Sub-national government administration (15%);General public administration sector (10%);General education sector (5%) Lending Instrument Specific Investment Loan Project ID P Borrower(s) State of Tocantins Implementing Agency State of Tocantins Infrastructure Secretariat (SEINF) Environmental Screening [ ]A [X ]B [ ]C [ ]FI [ ]TBD (to be determined) Category Date PID Prepared August 2, 2010 Estimated Date of Appraisal March 24, 2011 Completion Estimated Date of Board July 26, 2011 Approval Concept Review Decision Following the review of the concept, the decision was taken to proceed with the preparation of the operation. I. Introduction and Contet Country Contet 1. The State of Tocantins (SoT) is a recent State created under the 1988 Constitution from the split of the Northern half of the former State of Goias. Located in the Center-North of the country in the Cerrado biome (87% of the State), it has a tropical climate with a short dry winter. With an area of 277,000 km 2 and a population of 1.3 million, the state density is low. Urbanization rate has grown at a fast pace since the State creation and is now aligned with current Brazilian trends, with 75% of the population in urban areas mainly concentrated in the 10 major cities. However, more than half of the 139 municipalities have less than 5,000 inhabitants. Additionally, the State hosts two vulnerable groups, including between 7,000 (as per FUNAI) to 11,700 (as per FUNASA) indigenous people living mostly on four main indigenous lands 1 and about 5,000 Quilombolas 2 in 23 dispersed rural communities 3. 1 There are 480,000 indigenous people in Brazil living in 593 recognized territories. 2 Mocambos, Terra de preto, Comunidades remanescentes de quilombos, Comunidades negras rurais, Comunidades de terreiro are all designated as afro-descendent groups who in large part remained after fleeing slavery (Quilombolas) Quilombolas communities have been recognized in Brazil and it is estimated that in total eist about 3000 communities.

2 2. The SoT Economy. With a GDP close to R$12 billion (2007) (equivalent to US$6.2 billion using 2007 average echange rate), Tocantins is one of Brazil s less developed, yet fastest growing states. The economy has eperienced very high growth rates at its early stage of creation and remains dynamic at a high 14% growth per year on average over the past 7 years despite sensitivities to eternal shocks. The economy is comprised of the primary sector (20%, mainly agriculture), industry (25%, notably construction and agro-industry) and services (55%). The State has had large surpluses in its trade balance as a result of impressive rates of eport growth. However such eports rely on a limited number of agricultural products and logistics remain a major bottleneck, as the centers of production are located at best several hundred kilometers away from the main consumption centers. 3. The SoT social contet. Although the socio-economic situation has improved since the State s creation, further progress remains to be achieved: while GDP per capita has nearly doubled in the past 6 years, it currently stands at a relatively low R$8,900 per year (2007) (equivalent to US$4,600 using 2007 average echange rate), placing Tocantins 16th amongst the Brazilian states; Human Development Inde(HDI) was 0.71 in 2000 (vs in 1991) but more than 40% (2007) of the population remains below the poverty line (vs. 61% in 1991); the infant mortality rate is 22 (2007) deaths per 1,000 children under the age of one (20 on average in Brazil); finally, the literacy rate has improved significantly, from 62% in 1991 to 85% in The SoT Fiscal contet. Successive governments have managed to maintain a healthy financial position through the implementation of fiscal responsibility plans and budgetary policies since the State creation. Ta revenues have steadily increased at 14% per year on average in the past years and despite the global crisis, which negatively affected both main sources of revenue for the State budget (revenue from taes and federal transfers), revenues still increased by 5% in nominal terms from 2008 to Tocantins thus is in a privileged situation in Brazil as per the Fiscal Responsibility law, which determines a series of prudential financial ratios; the State possesses large capacities for indebtedness. Simulations for the financing of the proposed loan notably show that annual epenses and debt repayments will remain marginal when compared to net current revenues, and well below the authorized limits. Sectoral and Institutional Contet 5. Long term development strategies for sustainable development and quality of life for citizens inscribed within a vision for modernization and innovation have been prioritized with a certain consistency under successive four year multi-annual plans (Plano Pluri Anual - PPA) adopted by different governments over the last 15 years. These themes were naturally more

3 recently prioritized in the 30-year Regional Development Strategy adopted by the Government which took over after the dismissal of the former Governor in late The strategy, which was conceived following an intensive participatory process, notably aims at supporting an economic and social development of the State by improving public management efficiency, increasing decentralization and facilitating access to services, fostering innovation while improving social and environmental management, and improving the quality of education. While the present Project would build on the eperience gained from previous successful Bank investment operations in the State, which supported improved access and transport conditions, increased decentralization and modernized administration, and improved environmental management, it would also epand to new themes identified in the Government strategy, such as education, management by results in the administration and support to local economy by epanding and facilitating local production. Relationship to CAS 7. The partnership between the Bank and SoT has been continuous nearly since the creation of the State, with the succession of two operations, the Second State Highway Management Project (P006555) and the Tocantins Sustainable Regional Development Project (P060573). The State has shown an impressive capacity for implementing the activities planned under the first Project and innovative approaches were designed under the second Project, with a focus on local development, environmental management and social inclusion through a participatory approach. The State has also shown consistency in nurturing this partnership, independent of the particular governments in place. 8. The proposed Project is an opportunity to go one step beyond in the continued support of the Bank to Tocantins s sustainable development, (i) taking stock of achievements and limits of previous projects designs in order to bring new innovative approaches and, (ii) by introducing new activities, contributing to support government-wide development programs that go beyond transport. The proposed Project, which would act as a catalyst to integrate public policies in support of a less developed yet fast growing State, would support activities aligned with the World Bank Group s Country Partnership Strategy (CPS) (Report # BR), discussed by the Bank s Board of Directors on May 1, 2008 on its four key pillars, namely public sector management, equitability, sustainability and competitiveness. II. Proposed Project Development Objectives 9. The proposed Project Development Objective is to contribute to improved efficiency of road transport and enhanced delivery of selected public services in the State. The objective will be achieved through fostering (i) improved accessibility of populations, territories and productive regions to services, resources and markets under a component that will finance improvement to feeder roads, road corridors and road management, with an aim at favoring

4 modal integration, and (ii) institutional strengthening under a public service delivery component that will modernize administration management, strengthen local economic activities in territories, make sustainable use of natural resources and protection of natural ecosystems, and improve education in the State. III. Preliminary Description 10. The Project would be financed by Bank lending (US$300 million) completed by counterpart funds (US$75 million). Both components will consolidate the sustainable development themes considered in the Government strategy and PDO, namely an investment component aimed at fostering improved efficiency of rural transport and a wide institutional development support component to incentivize enhanced selected public services delivery. 11. Improving efficiency of rural transport (US$305 million) a) Improvement of the transport conditions on the municipal networks (US$70 million) with the continuation of the previous activities under operation P in municipalities that have yet to receive intervention (West Tocantins) aiming to build small drainage systems allowing year round traffic movement; b) Improvement of traffic safety on the unpaved State roads (US$25 million) with the elimination of a set of critical spots, notably the replacement of narrow wooden bridges; c) Improvement of the transport conditions on the State road network (US$45 million) by surfacing road sections which will close up and unite the paved network; d) Restoring the State paved network (US$160 million) via the implementation of a set of rehabilitation and maintenance performance based contracts; e) Improved transport management capacity (US$5 million), notably in multimodal planning, multi-annual work programs, and monitoring and evaluation of the quality of eecution. 12. Enhanced public services delivery in a set of defined public services (US$45 million) a) Modernization of the Administration (US$10 million) via (i) the introduction of a culture of Management by Results, including, inter alia, themes such as strengthened and integrated planning and budgeting and adapted human resource management, and (ii) a decentralization of the State administration services to the regions and support to improved management of municipal administrations; b) Support to the development of local production (US$5 million), mainly through the development of pilot projects fostering capacity building, improved infrastructure of production nodes and more integrated productive chains; c) Improved environmental management (US$15 million), in articulation with the other components, via (i) improved licensing and monitoring practices, (ii) implementation of an ecological sustainably-oriented land use management policy, (iii) implementation of a biodiversity conservation policy, and (iv) implementation of a policy to optimize water resources management;

5 d) Improved quality in the education system (US$5 million) via the implementation of information and management systems, capacity building, and strengthening and specific support to fragile populations; e) Improved quality of attendance of public services users and work condition for public civil servants (US$10 million) by rehabilitating or building public premises. 13. In addition, about 6.5% the Project value (US$25 million) would initially be unallocated and distributed to Project components in the course of the Project depending on rising needs. IV. Safeguard Policies that might apply 14. Safeguard policies applicable to the project and the actions to assess and mitigate them: 15. Environmental Assessment (OP/BP 4.01) - Direct environmental impacts resulting from rehabilitation (on eisting State paved roads) and surfacing (on eisting dirt roads) works are epected to be minor, and mostly related to civil works eecution. For improvements of the municipal roads (the same type of interventions as under the ongoing Project, consisting in the construction of small bridges and culverts allowing water crossing) and improvements of traffic safety on State unpaved roads (consisting in the replacement of eisting narrow often wooden structures with culverts and bridges), direct environmental impacts are also epected to be minor and related to the construction phase. For surfacing works: specific environmental assessment and environmental management plans will be prepared by the Borrower, and reviewed by the Bank. Their implementation will be monitored by specific environmental supervision and Bank s team field visits. For rehabilitation works: environmental management frameworks establishing specific environmental programs will be prepared by the Borrower, and reviewed by the Bank. Their implementation will be monitored by specific environmental supervision and Bank s team field visits. An Environmental and Social Impact Assessment (ESIA) will be prepared during Project preparation to evaluate potential impacts and propose mitigation measures. 16. The project may have indirect impacts on land use, to be mitigated through the implementation of land use policies. The Bank has been supporting the design of such policies and related policy instruments for the past 20 years and will continue providing such support under the institutional strengthening component (US$ 15 million). The potential social and environmental impacts of the sub-components Support to the development of local production and Improved quality of attendance of public services users and work condition for public civil servants are still to be determined and will be assessed in the ESIA. In accordance with the potential impacts, adequate mitigation and monitoring measures will be established based on specific EMPs and for the component activities and sub-projects. The elaboration of the ESIA will be contracted to specialized consulting firms, through Terms of Reference to be agreed upon by the Bank. The ESIA will contain: (i) the criteria for road and works selection, detailing mechanisms to screen out high risk subprojects from an environmental and social perspective; (ii) draft terms of reference for the

6 environmental and social assessment of these investments; (iii) mitigation measures, institutional capacity building measures, and monitoring and evaluation arrangements as necessary. 17. Natural Habitats (OP/BP 4.04) While the works for improvement of road transport conditions may affect riparian vegetation in water crossings on a very marginal fashion, the Project may result in indirect or induced impacts on the cerrado which are presently unknown. The safeguard has been triggered given that the specific road segments and their locations have not been identified. Project screening criteria would review the presence of natural habitats and appropriate measures to mitigate any possible direct or indirect impacts. 18. Forests (OP/BP 4.36) - The project will not directly involve forest management or activities in forest areas. However under its Institutional Strengthening component, it might result in the introduction of changes in land use policies that may positively affect the management, protection, or use of natural forests and plantations through the promotion of protected areas creation and establishment of ecological corridors and payment for environmental services programs. Thus, in accordance with OP/BP 4.01, Environmental Assessment, the Project s Environmental and Social Impact Assessment (ESIA) will assess the potential impact of the Project on forests and/or the rights and welfare of local communities and, if necessary, establish the appropriate mitigation measures. Project screening criteria would review the possible impacts o forests and appropriate measures to mitigate any possible direct or indirect impacts 19. Pest Management (OP 4.09) The sub-component Support to the development of local production might support activities that may trigger the policy. The Bank team will work closely with the Borrower to clearly define the necessary actions to be undertaken to: 1) promote the use of biological or environmental control methods (IMP); 2) reduce reliance on synthetic chemical pesticides; 3) purchase only substances meeting OP/BP 4.36 criteria for pesticide selection and use in the case of synthetic chemicals use; and 4) procure any pesticide under the Project that is manufactured, packaged, labeled, handled, stored, disposed of, and applied according to standards acceptable to the Bank. 20. Physical Cultural Resources (OP/BP 4.11) - Negative impacts on physical cultural resources are not epected during project implementation as the Project s civil works will normally be located within the eisting right-of-ways of road sections. However, chance findings during surfacing works are possible, and to handle such findings, Brazil has a well-developed legislative and normative framework, which is under the oversight of the National Institute for Protection of Historical and Archeological Sites (IPHAN). These procedures will be

7 described in the ESIA mentioned above and provisions for proper handling of the issue by contractors will be part of bidding documents and works contracts. 21. Indigenous Peoples (OP/BP 4.10) - While between 7,000 and 11,000 indigenous people live in or near one of the seven officially recognized indigenous territories in the State, the Project is not epected to have any impact on indigenous peoples. The ESIA will evaluate whether discrete activities undertaken under the Project carried out near areas where indigenous peoples are present, regardless of the status of those areas, have some kind of impact (positive or negative) on them. If the findings of the assessment suggest that indigenous peoples are present in the project area and that project activities will have some kind of impact on them, then an Indigenous Peoples Planning Framework (IPPF) will be prepared and disclosed prior to appraisal. 22. Involuntary Resettlement (OP/BP 4.12) - The project is not epected to require any land acquisition or involuntary resettlement. However, because the eact location and design specifications for the proposed investments for eample, localized road realignments, the elimination of accident-prone points, and the widening of bridges - remain unknown at this time, a Resettlement Policy Framework (RPF) will be prepared and disclosed prior to appraisal. The RPF will clarify resettlement principles, organizational arrangements, and design criteria to be applied to subprojects to be prepared during project implementation. Also, the ESIA will evaluate whether project activities related to biodiversity conservation, land use management, and water resources management could result in restrictions of access to natural resources in legally designated parks or protected areas, with adverse impacts on local livelihoods. In the event that they do, then a Process Framework will also be prepared. 23. Safety of Dams (OP/BP 4.37) - The Project does not anticipate investments in the construction of dams. However, under the local development subcomponent, specific projects may have to rely on eisting dams (e.g. for irrigation or industrial use). In order to ensure compliance with the requisites of OP/BP 4.37, the Project s Operating Manual will include appropriate screening mechanisms when reliance on eisting dams is anticipated for these projects. Should a specific project rely on an eisting dam, appropriate measures to verify dam safety would be taken in accordance with OP/BP 4.37 requirements and the policy would be triggered. Safeguard Policies Triggered by the Project Yes No TBD Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples ( OP/BP 4.10) Forests (OP/BP 4.36) Safety of Dams (OP/BP 4.37)

8 Projects in Disputed Areas (OP/BP 7.60) * Projects on International Waterways (OP/BP 7.50) V. Tentative financing Source: ($m.) Borrower/Recipient 75 IBRD 300 IDA Others (specify) Total 375 VI. Contact point World Bank Contact: Eric R. Lancelot Title: Transport. Engineer Tel: (202) elancelot@worldbank.org Borrower/Client/Recipient Contact: Davy Siffer Title: Secretary of Planning, SEPLAN Tel: (63) prdato@seplan.to.gov.br Implementing Agencies Contact: Sílvio Leão Title: Engineer, Superintendent of Strategic Support, State of Tocantins Infrastructure Secretariat (SEINF) Tel: (63) dae@seinf.to.gov.br VII. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fa: (202) Web: * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties claims on the disputed areas

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